Zacks_Analysts' Blog : Education Realty to Offer Shares - Analyst Blog

Education Realty Trust Inc. (EDR), a real estate investment trust (REIT) that owns, develops, and operates collegiate housing properties across the U.S., has recently announced its offer of 9.5 million common shares to raise cash and increase its liquidity. The company will also grant the underwriters an option to purchase an additional 1.4 million shares to cover any over-allotments.

Education Realty expects to utilize the proceeds from the secondary offering to repay debt, fund its development pipeline and go ahead with future acquisitions. BofA Merrill Lynch, the investment banking and wealth management division of Bank of America Corporation (BAC) and KeyBanc Capital Markets, the investment banking division of KeyCorp (KEY) are acting as joint book-running managers for the offering.

Education Realty is currently developing the first two phases of StorrsCenter, a mixed-use town center project adjacent to the University of Connecticut, through a joint venture with LeylandAlliance LLC – a leading real estate developer. StorrsCenter would include new retail, restaurant, office and residential units within a planned community of pedestrian walkways, green spaces and conservation areas. The entire cost of development is expected to be $220 million, while the first two phases of the project is expected to cost approximately $60 million.

Education Realty would own and manage the residential units, while the retail and commercial space spanning approximately 70,000 square feet would be developed and operated by LeylandAlliance LLC. The apartments are adjacent to the university campus, with adequate parking options available for residents.

Education Realty is one of the leading REITs in the U.S., with an expertise in university town housing. We maintain our ‘Neutral’ recommendation on Education Realty, which currently has a Zacks #2 rank that translates into a short-term ‘Buy’ rating and indicates that the stock is expected to outperform the overall U.S .equity market for the next 1–3 months.